A currency can be broadly defined as any medium of exchange. One of the most familiar currencies is the U.S. dollar. In the cash-based Unites States economy, dollars are the medium of exchange used for purchasing goods and services. For example, an employee may receive an amount of dollars in exchange for the services he or she provides to an employer. The employee may then exchange all or a portion of the dollars received from the employer for goods and/or services in the marketplace. In addition to the dollar, a number of other currencies exist in today""s economy. These other currencies and the rules which dictate how they are exchanged may be established by an individual or an organization. Generally, these currencies fall into one of three categories: privately defined currencies, loyalty points, and play money.
An example of a privately defined currency is a scrip. A scrip is a currency established for exchanging goods or services within an organization. The organization establishing the scrip determines the rules for exchanging the scrip. These rules may include the value of the scrip relative to another currency (such as the dollar), the goods or services which may be exchanged for the scrip, and whether bearers may negotiate the scrip among themselves. Although the bearer of a particular amount of an established scrip may have initially used dollars to purchase the scrip, the scrip is used as the medium of exchange within the organization. For example, a public transportation authority may establish a scrip for use when obtaining transportation services from the organization. Transportation customers may initially use dollars to purchase tokens (scrip) from the transportation authority. However, to obtain access to a subway or bus system run by the transportation authority, the customer will either hand one or more tokens to a transportation authority employee or insert the tokens into a machine.
Similarly, other organizations (such as a private campus, a hospital or a prison) may establish a scrip for use as the medium of exchange for obtaining goods or services within their systems. In most cases the scrip has no value outside the system in which the scrip was established. For instance, subway tokens are not likely to be accepted to purchase candy at a local grocery store.
While establishing a scrip may be convenient to an organization, there are administrative costs associated with maintaining these systems. These costs may include salaries for employees who ensure machines properly accept the scrip, the cost of printing or minting the scrip, and the cost of delivering the scrip.
Loyalty points are another form of currency. When a customer purchases goods or services from a merchant, the merchant may grant the customer a certain number of loyalty points. Upon accumulating a certain number of the loyalty points, the customer may redeem the points for goods and/or services available from the merchant. Loyalty point systems are currently maintained by a wide variety of businesses including airlines, bookstores, and grocery stores. For example, air carriers have established a loyalty point program with a currency known as frequent flier points. Although the specifics of each program vary between air carriers, in general, a customer who purchases a ticket for air travel from an air carrier receives a certain number of frequent flier points for each mile flown on an airplane owned by that air carrier. The air carrier maintains records which reflect the number of points each customer has received. Upon accumulating an established amount of this currency, the customer may redeem the points for upgrades to first class seating, additional airline tickets, or other goods. The opportunity to obtain additional value from the purchased ticket encourages customers to continue traveling with the same air carrier in an effort to accumulate more frequent flier points. As with the scrip systems mentioned above, the organization which establishes a loyalty point system establishes the rules for negotiating in the currency.
Each loyalty point program usually issues a membership card to each participating customer. The membership card often includes an account number for tracking the number of loyalty points a customer has acquired. Consumers participating in more than one loyalty point program are disadvantaged by the inconvenience of having to keep track of multiple cards. As the number of cards increases, consumers are less likely to keep the cards in their immediate possession and are also likely to forget some of the programs in which they participate.
There are currently known systems for maintaining loyalty points on smart cards. Smart cards are about the size of a credit card and include computer chips which, among other functions, keep track of loyalty points. These systems, primarily in use in Europe, permit participation in multiple loyalty programs using one card. Nearly all credit cards in Europe are chip cards which possess the capacity to support loyalty programs. These chip cards are currently in wide circulation and are likely to be in the immediate possession of the owner most of the time. Unfortunately, most of these European smart card systems are closed systems. Further, these smart cards were not conceived to offer the flexibility of defining many different currencies using the same publicly available infrastructure and the same cryptographic functions. Thus, the process of establishing a new currency for use by everyone in possession of a smart card is cumbersome because a business or individual who wishes to define a new currency must either negotiate with whoever issues the smart cards or issue their own card.
Another type of currency is generally known as play money. Play money is established in the context of a game used for entertainment purposes. When the game is invented, a scarce resource is defined. This scarce resource may be considered a form of currency which can be won while playing the game or purchased by participants. Participants who are skilled at playing the game or otherwise possess an amount of the scarce resource may want to sell the resource or exchange an amount of the resource with other participants who may be less skilled at the game or who otherwise desire to obtain more of the resource.
xe2x80x9cAesirxe2x80x9d and xe2x80x9cSanity""s Edgexe2x80x9d are examples of role-playing Internet games which include the process of bartering for scarce resources. These games, known as Multi-User Dimensions (MUD""s), may be played against opponents over the Internet and involve obtaining ammunition and various types of weapons for use against other opponents. An additional dimension could be added to games similar to these if data representing scarce resources such as weapons or ammunition credits could be exchanged, for example, from skilled players who have acquired significant amounts of ammunition credits to less skilled players seeking more ammunition credits so they may continue participating in the game. Currently, the costs to establish an infrastructure so worldwide Internet participants in a game might exchange a scarce resource is not economically feasible for individual game inventors.
In view of the above, it can be appreciated that there is a need for a system which solves the above described problems by providing a publicly available and cost effective infrastructure supported by a cryptographic system which permits users to easily define and distribute new currencies.
One embodiment of the present invention includes a method and apparatus for establishing and distributing currencies. A user may establish a currency and store an initial amount of the currency on a smart card by visiting a web site supported by a system server. The system server is owned by a smart card issuer. Using a form downloaded from the web site, a user defines the characteristics of the currency and the rules for exchanging the currency. A cryptographic key management system permits smart cards to manage and manipulate numerous currencies arranged in currency trees.
The leaves of a currency tree contain the parameters which characterize the currency (such as the name of the currency, the type of currency, and the amount of currency). The tree root value is the numerical result of cryptographic xe2x80x9cHashingxe2x80x9d operations performed along a path from the currency tree leaves to the root. The root value is the only value which needs to be stored on the smart card. Establishing a new currency on a smart card or distributing a currency to a smart card which has not been initialized with a currency entails adding a new leaf to a currency tree stored on the smart card and computing a new root value for the tree. If the smart card has already been initialized with the currency, transferring an amount of a particular currency to a smart card entails incrementing the amount of currency in the leaf corresponding to the currency and computing a new currency tree root value along the path from that leaf to the root.
The invention provides a publicly available infrastructure which permits organizations or individuals to define new currencies and share the administrative costs associated with maintaining a scrip, loyalty or play money currency system. These and other advantages and features of the invention will be more clearly understood by reference to the following detailed description of the invention, the appended claims and the several drawings attached herein.